Are they so different that it's justified to have so many different distributions? So far I guess that different package manager are the reason that divides the linux community. One may be on KDE and one on GNOME but they can use each other's packages but usually you are bound to one manager
You could also ask: "Why are there so many audio formats? Why are there so many video formats?" And so on.
The reason is different people have different ideas on what is the best way to do things.